Startups /r/startups Legal Office Hours Friday, April 2nd on Discord |
- /r/startups Legal Office Hours Friday, April 2nd on Discord
- Dealing with an agency holding our code to ransom
- How we got our first paying customers for a chrome extension. Pivots and lessons learned!
- Get experience in a niche industry by working for a “competitor”?
- Giving early employees equity in self funded startup
- How would you rate the split?
- What's reasonable equity for a co-founder CTO who'll build everything for the MVP?
- Early-stage Startup Decision Making. Any help is appreciated.
- startups who outsourced their design - what tips do you have, and how do you ensure quality delivery?
- Getting press pre-launch aka before clients/revenue
- Hiring an assistant with the right compensation structure?
- How to divide equity pie
- Seed round- priced or SAFE?
- How does software license work for technology stack?
- Pre money valuation and investment
- Should I patent or not.
| /r/startups Legal Office Hours Friday, April 2nd on Discord Posted: LoveEsq#0382 and Brent#0558 are graciously holding office hours on the [/r/startups Discord](https://discord.gg/9qsrDuEeZS) starting at 11am PST on Friday, April 2nd. Grab a coffee, pull up a chair, and beg tidbits of legal wisdom from the masters! If you are a lawyer who would like flair here or on the discord, message the moderators to get verified! [link] [comments]  |
| Dealing with an agency holding our code to ransom Posted: TL;DR has anyone had experience dealing with a development agency holding code to ransom. What can I do or say to speed to process along without burning bridges? 9 months ago I was brought on board at a start-up who's MVP was outsourced to a development agency. For 9 months I've been somewhat content with them continuing maintanence and small improvements, while we worked on other parts of the system we had in house, but I was brought in with a specific remit to build a development team in house. We're now in a position where we want this code migrated to our own hosting, and the code completely under our control in our repos, but every time I push for this, I'm being met with roadblocks. Even to the point where they have said they will have to draw up an estimate for the handover work. All I want is read access to the repo to fork it, or a zip of the project, and a database dump. By the time they did the estimate they could have bloody done it. Also, who the hell doesn't account for handover as part of a contract!!!! endrant. I should add, the IP is absolutely ours. We have all the paperwork and contracts neccessary for that. It just feels like they are trying to hold on to it as long as possible to keep us on the hook for hosting and maintanence. However at the same time dragging their feet on doing any real work for us until they have an opening between their larger clients. Anything I can do or say that might light a bit of a fire under them, without completely buring bridges in case of future needed support would be helpful. Edit: wow this got a lot more engagement than I expected. A huge thank you to everyone who responded. Hopefully I'm not the only one who will find this helpful. I think the crux of the matter is I need to be more firm. These people aren't my friends. Concrete dates and a firm tone I think is what will be required. And if not, regrettably, things will escalate to our lawyer. Thanks again. [link] [comments]  |
| How we got our first paying customers for a chrome extension. Pivots and lessons learned! Posted: In December, my co-founder and I launched a chrome extension that helps people find Airbnbs with fast WiFi. Since then we've been iterating in search of a revenue model. This week we finally got our first paying customers! Here's how we got there: When we originally launched, the extension was completely free to use. Users could just click one button to add the extension to chrome, and they would then be taken to a brief welcome page. We were not capturing email addresses as part of this flow, which we later learned was a big mistake! After we had a few hundred users we wanted to test if we could convert them to paying customers. We designed and built an experience that would start locking out users from using the extension if they had viewed more than 10 listings in one month. They would then be prompted to upgrade their plan if they wanted to continue viewing listings with the extension. Perhaps not surprisingly, many users were startled by the change and uninstalled the app. We only had 2-3 people even click the upgrade button while 20-30 had uninstalled. After a few days, we pulled the plug on this test and figured we needed to make some changes! We recognized that the core issue is that we weren't setting expectations properly upfront. We decided to completely re-do the sign-up flow. Requiring users to sign in via google AND select a plan all before they even get to try the extension out. This way they would essentially be "opting in" to the freemium option instead of just having it surprise them one day. This was a pretty large engineering investment, but we felt it was worth it to get it right. We weren't sure how much additional friction people would tolerate during the sign-up flow. It turns out, quite a lot! At least for our chrome extension. Once people are "hooked" enough to want to try something out, they seemed to convert at very high rates from installation -> sign-in -> plan selection. After only a few days we've already had 6% of our new users upgrade their plans to the paid version! Since we've now started collecting email addresses I was able to personally reach out to each of our new users and start building a relationship with them. Key takeaways:
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| Get experience in a niche industry by working for a “competitor”? Posted: I'm building a SaaS product that I hope to launch in the next 12 months or so. The product is in a niche industry that I don't have professional experience in but I went to school for it and know a number of people in it. Some of my contacts in the industry have validated and helped me refine my idea. To better understand the industry, do you recommend I look for an engineering (or perhaps sales) position with one of my few competitors while I continue to build my SaaS product on the side? Will having that on my resume help me with VCs? And do I run the risk of entering NDA / non-compete territory with my competitor? [link] [comments]  |
| Giving early employees equity in self funded startup Posted: I co-founded a company with one other co-founder around one and a half years ago. We don't have any investors and both own 50% of the company. It started more as a hobby project next to university, but has quickly turned into our full time occupation and has been growing rapidly to the point where we have decent profits, enough to comfortably pay salaries for any employee needs we have at the moment. We're now in the process of recruiting the first developers (outside of us founders), and so far we haven't really considered including equity as part of the compensation, mainly because we don't have any legal setup for that (as I said, we simply are 50/50 owners in a very traditional legal setup, nothing startup specific). Especially after reading some of the posts and comments on this subreddit, I'm questioning whether this might be the wrong approach. We are planning to pay them a salary that is at or even slightly above their "market value", so it's not like we have to give out equity to make up for an otherwise poor salary. But do early early employees expect some form of equity as part of their compensation? We want people that are motivated and willing to work in an startup environment, and I'm not sure if they might rule out startups that don't give them equity. I would love to get your opinions on this, both from the perspective of a founder and from the perspective as a candidate thinking of joining a startup. [link] [comments]  |
| Posted: Hi startups, a friend and I are in the process of working on a startup similar to AngiesList. I'm going to generically explain the situation and hoping to hear some feedback on if I'm calculating this right. So, 1 founder and 1 co-founder. Co-founder is needed to run the business in the ground (in a different country than founder). Founder responsible for app (developing and running it), online ads, supporting the ground team to get setup and run (with $ and advice). It will not be feasible for founder to run the startup alone on the ground or find a different co-founder. Co-founder responsible for logistics on the ground (office space, equipment, hiring,etc...) and actually running the business. We initially talked about 60/40 split with founder getting 60%. Then we came across the Founder's Calculator and calculations are ranging between around 75/25. We're weighing the rows like so: Idea (10), Business Plan (3), Domain Expertise (3), Commitment & Risk (7), Responsibilities (8) This link has an example of what the Founder's Calculator looks like. https://ibb.co/2F584jp What would you weigh each row? Based on that, what would you say the split should be? We're trying to be less emotional about things as much as possible. Much appreciated yall! [link] [comments]  |
| What's reasonable equity for a co-founder CTO who'll build everything for the MVP? Posted: Two people have reached out to me in order to team up and build a MVP for a new prop fintech startup. There'll be no compensation and it will only be equity based until, hopefully, it's generating revenue. The idea has been validated and it seems interesting so I'm considering pursuing it. What is a reasonable equity stake? I would be building literally everything from UX design, wireframing, frontend, backend, database and infrastructure. I would also be a co-founder (this will be one of my requests as well to make it clear, but I think this will be fine but I will ask to be sure). I was thinking around 30%-40% equity as I would literally be building the whole thing. I'd love to know peoples thoughts to know if I'm being unreasonable, underselling myself etc. I have over 10 years experience so more than capable of building this. [link] [comments]  |
| Early-stage Startup Decision Making. Any help is appreciated. Posted: Background: So I've been working on my startup for 1.5 years now and gained some very valuable insight through customer discovery interviewing. It seems like the startup is ready to move towards an MVP to validate our value propositions. The startup is very science heavy and is spun off of work that a colleague and I are performing at our university. We are both enrolled in a PhD program and double dipping in terms of building our startup and finishing our degrees (50/50 equity split). Time is split between the two. My initial plan was to stop after a masters degree and hop straight into the startup full time, but my cofounder was set on finishing the PhD which could take several years. I figured that if the startup failed, I'd at least have plenty of connections along the way that could open new doors. I understand that a PhD is not necessary to launch a science-based startup. A startup is not a place to conduct research. It's a place to apply proven research to provide value to a customer. I believe that I could build an MVP with the knowledge I've gained through my masters degree. Dilemma: For the past year and a half, it had become apparent to me that my cofounder has not put in the same amount of effort as me. He will only work if I ask him to do so. There has never been a time where he initiated work. I was hoping for a cofounder that showed the same amount of interest and effort as me. I recently spoke with him and he made it clear that he wants to focus on publishing papers and writing his PhD proposal this summer. So I'm wondering: should I take this project on by myself? I do believe that I can cover his ground. Because the startup wasn't official on paper anywhere, could I just start something on my own? I'm not trying to be an asshole, I just don't know how to drop him from the startup without being a dick. Plus, I'll be working with him for at least a few more months at the very least and the last thing I want is a bad relationship. Any advice is highly appreciated. This has all been very stressful and has made thinking clearly very difficult. I just figure that if he's not putting in the effort now, he never will, and I'll have lost 50% of the company. If you have any other question about the situation, please ask! [link] [comments]  |
| Posted: Hi there! Looking for general tips / suggestions from folks who've outsourced design for your startups:
Thanks! [link] [comments]  |
| Getting press pre-launch aka before clients/revenue Posted: Hi! I'm launching a new product/brand soon and before launch, am planning on reaching out to media to get press. I have a somewhat unique product in the industry, and only friends/family have used it so far. In the event a media outlet responds (if at all!), I was wondering whether they'll require that I have Thank you in advance! [link] [comments]  |
| Hiring an assistant with the right compensation structure? Posted: I run a startup in the mortgage lending space and find myself getting tied down to working in the business rather than working on the business. This is taking time away from larger projects that will help my company scale and grow. How can I determine a compensation plan that will help me attract the right talent? As it stands now, I'm trying to hire someone relatively new to the industry that has an interest in real estate finance and will become my production manager after a 12 month period. I've posted on jobs boards with the following compensation structure:
Everyone that applies either wants to be a loan officer (strictly an independent sales role) or they are interested but are in later stages of their life where building a career and career growth is not important to them. They all seem to be members of the 8:01 and 4:59 club. Am I fishing in the wrong pond or am I using the wrong bait? [link] [comments]  |
| Posted: Hi, I'm having trouble deciding on the equity split with my co-founders. Here is the story in the most unbiased way possible: Background on the situation: I am an officer in the military, and my current job in the military is to get a masters degree in mechanical engineering at a prestigious university. So my current full-time job is to be a master's student. During my studies (about 3 months ago), a friend of mine and I came up with an idea for a robotics startup. Let's call this first friend Co-founder #1. Co-founder #1 got his master's in mechanical engineering from the same prestigious university as me. Currently, Co-founder #1 works full time at a self-driving car company as a software engineer. The two of us came up with the idea, and decided to enter into a pitch competition at our school. Both co-founder #1 and I have been working on the startup idea since mid december in a part-time capacity. The competition was a multi-phase competition that played out between december 2020 and march 2021. One month into the competition (about mid January), Co-founder #1 and I decided we needed to bring on another founder, so we brought on Co-founder #2. Co-founder #2 did his undergrad with me and co-founder #1 at a prestigious engineering school. Co-founder #2 went to another prestigious engineering school to get a master's in mechanical engineering, and now works full-time as a patent agent at a prestigious patent firm. Co-founder #2 has a lot of business and technical experience, in addition to his experience with IP issues. So co-founder #2 joined our startup effort in January and began helping us prepare for the competition and help refine our business model. Through January, February, and March, me, co-founder #1, and co-founder #2 worked part time (I put in ~15-hours a week and co-founder #1 & #2 put in about ~10 hours per week). Together, between January and March, we worked really hard on the business plan, customer development, customer outreach, market research, and the pitch deck. We ended up doing well at the university's pitch competition, and we were awarded some money (I don't want to be specific but we won >$10,000). This prize money will help us get started on prototyping in the near future. We now have decided that we need to bring on one more co-founder to help with technical development, and prototyping. This guys is co-founder #3. Co-founder #3 is a friend of ours who is currently getting his master's degree in electrical engineering at the same school as me. He is very talented and will play a key role in helping us develop our prototype. There are four co-founders currently. Since inception (approximately 3.5 months ago),the contributions have been as follows: Me and co-founder #1 actually came up with the idea. Co-founder #2 came in one month after me and co-founder #2 and has been incredibly valuable for his credibility, strategic thinking, and business sensibility. Co-founders #3 joined just now, so 3.5 months after me and co-founder #1. From now until September (when we plan to raise pre-seed money), the contributions among the 3 of us will be equal in a part time capacity. In september, assuming we successfully raise a pre-seed round, co-founders #1-3 will all quit their jobs and go in on the startup full time. Co-founder #1 will be the CTO, co-founder #2 will be the CEO, and co-founder #3 will be the director of engineering or chief roboticist. So starting in september, I will be the only co-founder who is still working part-time. (I estimate that I should be able to contribute 10-15 hours per week while I complete the rest of my military service). Due to my commitments to the military, I will be working part-time on the start-up for about 3 years and 9 months after my co-founders quit their jobs and go full-time. Currently, my co-founders are arguing the equity split should be as follows: 8-39-40-13. Where I get 8%, co-founder #1 gets 39% as the CTO, co-founder #2 gets 40% as the CEO, and co-founder #3 gets 13% as Director of engineering. Does this seem fair? They are saying that based on my status as a creator and someone who came up with the idea, I deserve about 5%. They are saying I deserve another 3% for the part time work I will do while I am serving in the military. They are saying that I will get some sort of VP job once I leave the military in ~2025 and rejoin the company full-time. So I deserve 8%. Does this seem fair? Each of the four of us will receive 5% at the start, and that 5% has a one year cliff. The other founders will have their equity vest over 4 years. The main issue is that when it comes time to fundraise, it will be very important to explain with confidence to the VC investors why I (a part time founder/employee), deserve however much equity I get. I think that this issue can be mostly addressed by having my equity vest much more slowly, or be given to me after a much longer cliff (for example I only get my additional 3% equity after I leave the military and rejoin the startup full-time). The way I see it, there are two numbers that must be negotiated. There is X and there is Y. X is the percentage I deserve for being a creator. Y is the percentage that I deserve to receive as a reward for continuing to work for the company part-time after we do our pre-seed round of fundraising. My co-founders are saying that X=5% and Y=3%. They say that X makes sense since there are four of us, and the fact that we helped bring the company this far means that together, we deserve to control 20% of the company. So they are saying that X=5% because 20% divided by four people yields a 5% equity stake for me as a creator. They are saying Y=3% because it would be ridiculous to compensate someone any more than that for a part time role during the formative years of the company. I think X should equal 6% and Y should equal 4%. I believe that X should equal 6% because I had a bigger role as a creator than co-founders #2-3. I believe that Y should equal 4% because I will be able to contribute to business development and strategy while I am working part time, and giving me less than 4% for that role is just telling me that I'm not valuable to the company, and my time and efforts don't mean very much. I'm curious to hear others opinions. Am I an idiot to take 8% of a company that I had the idea for? Or am I lucky to be given 8% for having an idea, and letting my friends work full time on it while I do part time work and keep serving in the military? [link] [comments]  |
| Posted: My seed round investors are willing to do a priced round instead of SAFE. I would love to get some feedback from fellow entrepreneurs/founders regarding the seed round equity financing. Is there any downside of priced seed round? My previous post: https://www.reddit.com/r/startups/comments/mbmt9d/preseed_capital_raise_question_usa/ [link] [comments]  |
| How does software license work for technology stack? Posted: Hey All, I have been running a podcast based startup for a few years and recently decided to shut everything down. I had someone reach out to me about licensing the tech stack. I've never done this before and was looking for anyone who has experience or can point me to some resources. Is this usually a one-time payment, Annual royalty? How much is paid for something like this. Also, I have someone willing to make an upfront one time payment right now, but thinking if a longterm royalty might be better. Anyone, i would appreciate any advice and help! [link] [comments]  |
| Pre money valuation and investment Posted: As a startup founder who doing a fundraising, is it necessary that Investment money should be lower than the Pre-Money valuation? What are the risks if the pre money valuation is lower than the invested money? Can a founder negotiate the pre and post money with the investors during the first pitching? Is it ethical that a founder negotiate it straightaway? [link] [comments]  |
| Posted: I have an idea which I think is unique and I'm thinking of patenting it. However I have not much capital (just enough for the patent) and no experience starting a company but have people who can help. I think the idea could be worth lots of money if it takes off. Also I know lots of startups fail. I'm basically wondering if it's a good idea to spend all of my savings on a patent :p and if I do go for it what should I do next? [link] [comments]  |
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